High Demand for Build-to-Rent Model with Valley Roots

By Angela Gonzales | Phoenix Business Journal

With more than 5,000 existing units and more than 6,900 more units under construction in metro Phoenix, the wildly popular build-to-rent sector is continuing to explode in Arizona and is now building momentum across the nation.

With 32 build-to-rent communities already in place across the Valley, there are another 34 projects under construction, according to research Colliers International conducted exclusively for the Phoenix Business Journal.

These unique units are growing in popularity, commanding average monthly rental rates of $1,990 at a time when occupancy is at 96.8%, according to Colliers International research.

Exactly what is this product that is gaining so much attention by renters, homebuilders and investors?

This unique hybrid model pairs the luxuries of single-family detached homes with their own backyards built into a community rich with amenities, including resort-style pools, clubhouses, dog parks, barbecue pits and other amenities.

And as home prices continue to soar in metro Phoenix, these rental communities are gaining traction.

The Business Journal hosted a virtual residential real estate panel on Oct. 21, focusing on two homebuilders at the forefront of this trend and two builders who are somewhat new to the game, but come loaded with capital, land and big growth plans.

Combined, they have plans to build billions of dollars of projects in Arizona and across the country.

“There’s an incredible demand for build-to-rent product,” said Josh Hartmann, CEO of Phoenix-based NexMetro Communities, one of the first companies to introduce this unique hybrid model to the world. “People are renting more and more. It’s becoming a lifestyle choice.”

On the other hand, Walton Global Holdings LLC entered the market earlier this year.

While it may sound like the Scottsdale-based developer might be a little late to the game, Walton Global Holdings comes with 80,000 acres in its pocket — at a time when many builders are scrambling to find affordable land.

Paul Megler, executive vice president of Walton Global Holdings, said there’s more demand for housing than homebuilders can handle, which means it’s a good time to add this product to the mix.

Also somewhat new to the market is Scottsdale-based Empire Group of Cos., which has $2 billion of build-to-rent projects in its pipeline.

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